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Bill would speed sales of homes financially under water

Ledyard King | News-Press

Florida communities still reeling from the housing crisis might get some help under a bipartisan bill that would speed short sales on homes worth less than what’s owed on them.

The measure would set specific notification deadlines for lenders and require them to decide whether to accept a short-sale offer within 30 days of a borrower's request. The goal is to force all parties with an interest in homes that are under water to move quickly rather than let the homes sit abandoned for months as they lurch toward foreclosure.

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Florida was one of the nation’s hardest-hit real estate markets at the peak of the housing crisis. In October 2011, nearly one in six home sales – or 16.7 percent – in the state was a short sale, according to RealtyTrac, which compiles and analyzes housing data. That was twice the national average.

The situation has vastly improved since then, with data for October showing the percentage of short sales hovering around 6 percent.

Southwest Florida was particularly hard hit, though the region has bounced back as well. The latest data shows that October's 89 short sales in Lee County made up 5 percent of all home transactions, while the 55 in Collier represented 5.4 percent of all sales.

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Still, Rep. Tom Rooney, R-Okeechobee, and Rep. Lois Frankel, D-West Palm Beach, say the problem remains big enough to warrant congressional action.

“Although we’ve progressed since the trying times of the 2008 housing collapse, we are far from clearing out our nation’s backlog of short-sale homes,” Rooney said in a release announcing the legislation. “By streamlining short sales, we can help keep homes out of foreclosure, fuel growth in the housing market, and deliver a needed boost to Florida’s economy.”

One concern is homeowners who are under water often abandon their homes, further eroding their value and the value of neighboring homes.

“This legislation will help prevent properties from deteriorating and put them in the hands of caring families,” Frankel said.

The Mortgage Bankers Association declined comment on the legislation.

Fort Myers Realtor Bill Mitchell welcomed the legislation as a way to prod lenders who might otherwise stall until the real estate market rebounds, leaving distraught borrowers in limbo.

Too often, he said, the speed of processing short sales varies from lender to lender.

“It really depends on the financial institution and whether or not that file that’s sitting on who-knows-whose desk is ever going to get worked,” said Mitchell, who works at Marc Joseph Realty. “You never know. It’s tracking down Big Foot. Where is it? Who’s got it?”